New Jersey Distributor Plans to Bring Chinese Cars Within Year

DETROIT – Not far from Cobo Center, site of the 2007 North American International Auto Show, an upstart vehicle distributor has staked out a portion of the Marriott hotel here.

The company, New Jersey-based Chinese America Cooperative Automotive Inc. (CHAMCO), is displaying a compact pickup truck and SUV in one of the Marriott’s many ballrooms, with plans to begin importing the vehicles within the next 18 months.

The two trucks are the products of China’s Hebei Zhongxing Automobile Co. Ltd., also known as ZXAuto China.

CHAMCO says it was invited to display its wares at the Detroit auto show but preferred to take the offsite tact instead.

“We were invited to be in Cobo Hall, in the basement, in the corner – and the invitation (came) with an attitude,” CHAMCO Chairman Bill Pollack tells Ward’s.

“We said, ‘No thank you’ – (also) with an attitude,” Pollack says. “We’ll do it our own way.”

Besides, CHAMCO’s current priority is to convince dealers to sign on, not attract media attention, says CEO Veechwin Li, a former global business director for Proctor & Gamble’s Gillette disposable razors.

CHAMCO compact pickup one of two models planned for import.

“We’re half car people and half not car people,” Li says of the company’s 25 staffers.

Pollack is from the tech field, having most recently managed a public technology company, but he says his skills have proven strikingly transferable to the automotive field.

“It’s just amazing how quickly I was able to become part of the flow around here and make things happen,” Pollack says.

CHAMCO’s charter allows its dealers, executives, manufacturers and others, including its Detroit-area public relations company, to have a stake in the importer.

As with public relations, CHAMCO is outsourcing “the majority of our major business functions,” Li says, with the distributor looking to do business with information technology companies SAP AG and Oracle.

CHAMCO expects to undercut prices of the biggest players in segments it plans to compete in by 20%, Li says, with base prices for its compact pickup and SUV targeted at about $13,000.

Initial North American projections call for sales of 75,000 of the two models, combined, in the first year. CHAMCO expects to launch sales in Mexico before entering the U.S.

A sedan and cross/utility vehicle in the same price range also are planned for debut about a year later, Li says, adding ZXAuto recently bought into an assembly plant in Changchun, China, via a joint venture with the local government, which swapped equity in the facility for a stake in the Chinese auto maker.

The deal includes 21.5 million sq.-ft. (2 million sq.-m) of land adjacent to the plant that would allow future expansion.

ZXAuto has secured $130 million in financing and has received permission from China’s central government to export sedans to the U.S. and other countries, Li says.

Minivans, sports cars and hybrid-electric vehicles are other possible offerings from CHAMCO, but not all necessarily will come from ZXAuto, which currently builds just pickups and SUVs, Pollack says.

ZXAuto sold about 6,000 vehicles in China in 2006 and exported 22,000 to 40 countries, including markets in Africa and the Middle East.

Li says CHAMCO already has signed 13 U.S. dealers representing 22 locations and received verbal commitments from an additional 15-25. Another 25-30 dealers are being put through the due diligence process.

The importer has presented its plans to 100 dealers and expects to meet with more in Detroit and at the upcoming National Auto Dealers Assn. convention in Las Vegas early next month.

The upstart importer has divided the country into 400 market areas, determining the number would be the right size for a smaller auto maker, Li says.

CHAMCO will launch with 150 selling points in the top 60 markets, he says, noting the rest will come online as models are added to the lineup.

“We’re not being grandiose in terms of our volume (projections),” Pollack says. “There were others out there talking about (selling) 200,000 vehicles in year one for a car that doesn’t even exist yet,” he says in reference to Malcolm Bricklin.

Bricklin had that as an early goal as part of a now-defunct plan to sell Chery Automobile Co. Ltd. vehicles in the U.S. through his Visionary Vehicles LLC distributorship. He now wants to design his own vehicles and have them built in China by contract manufacturers.

“We’re talking about 75,000 vehicles (in) year one of a car that’s already in production,” Pollack says. “We’re trying to be very, very careful to make sure we can live up to whatever we say.”

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